Big Data and Your Wallet

Remember Watson – the IBM computer that beat Ken Jennings on Jeopardy? He – or should I say it – was an early example of how big data can solve complex challenges.

Today, big data and the deep learning techniques behind Watson are being used to solve problems in dozens of fields. From medicine to communications, computers are taking incredible volumes of information and using it to build better mousetraps.

And now big data is changing our bank accounts.

You might think that big data belongs only in the realms of hedge funds and private equity firms that can afford to spend millions of dollars on server farms and build expensive analysis infrastructures. That’s no longer the case.

Google, Amazon and Microsoft have made the raw computing tools available for rent by the hour. Smaller companies can now take advantage of this processing power that was once only available to the elite. Now, there are more options that ever for managing money.

Here’s how this impacts your money and your investments.

Be more precise. Most investors have traditionally been limited in how they invest. They don’t want to take wild bets, and have to stay with the stock or bond market. Investors can do better than broadly following the markets. New technologies are allowing people to invest in different assets dynamically, in ways that still be understood.

Be responsive. Hedge funds started as ways to protect assets when the market fell. Now investment tools can do the same thing. Working with market signals, we can track when the stock market turns, and make portfolio adjustments to respond. We can analyze far more data than was possible before even while keeping costs low. Making adjustments no longer takes days – by which time most of the damage had already been done.

Be flexible. Investors tend to work towards two or three savings goals at most. These can be a house, college and almost certainly retirement. All of these have different needs for when you need the money and how it should be invested. With deep learning techniques, thousands of portfolios can be analyzed, and more informed decisions can be made about how to invest your portfolio.

The best thing about these new technologies is that it does not require spending hours a day manually tracking investments. These formulas move with the market. These investments are available at a fraction of what it cost a human to make far more imprecise decisions a decade or even five years ago.

So perhaps it will be possible to edge ahead of Watson or his computing brethren on some game show when the answer is “big data matters here.”

The question is, of course, “What is my wallet, Alex?”

Mansi Singhal is the CEO of qplum a robo-advisory firm that uses deep learning and AI techniques from pioneered at large banks and hedge funds to manage the assets of clients of all sizes.